Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Back on the 9th Feb, leading non-bank lender <a href="https://www.smartkarma.com/entities/pepper-money-ltd-australia" target="_blank" data-smartkarma-citation="entities:24157:1" rel="noopener">Pepper Money (PPM AU)</a> confirmed KKR and <a href="https://www.smartkarma.com/entities/challenger-ltd" target="_blank" data-smartkarma-citation="entities:16870:1" rel="noopener">Challenger Ltd (CGF AU)</a> had submitted an NBIO by way of a Scheme.</li>
<li>KKR/CGF offered A$2.60/share, a 47.7% premium to undisturbed, and ~1.49x P/B (based on 1H25 numbers). KKR currently holds 60.34%.</li>
<li>Domestic peers are down 11% since the NBIO was announced. Global peers are down even more. KKR/CGR have reduced the NBIO by 13.5% to $2.25/share (including dividends). Best &amp; final.</li>
</ul>


Back on the 9th Feb, leading non-bank lender Pepper Money (PPM AU) confirmed KKR and Challenger Ltd (CGF AU) had submitted an NBIO by way of a Scheme.
KKR/CGF offered A$2.60/share, a 47.7% premium to undisturbed, and ~1.49x P/B (based on 1H25 numbers). KKR currently holds 60.34%.
Domestic peers are down 11% since the NBIO was announced. Global peers are down even more. KKR/CGR have reduced the NBIO by 13.5% to $2.25/share (including dividends). Best &amp; final.


Pepper Money (PPM AU)'s Board Should Accept The New Reality

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/challenger-ltd" target="_blank" data-smartkarma-citation="entities:16870:1" rel="noopener">Challenger Ltd (CGF AU)</a> has reduced its non-binding offer for <a href="https://www.smartkarma.com/entities/pepper-money-ltd-australia" target="_blank" data-smartkarma-citation="entities:24157:1" rel="noopener">Pepper Money (PPM AU)</a> by 13.5%, from A$2.60 to A$2.25 per share, citing deteriorating market conditions and the operating environment. </li>
<li>The offer has been declared best and final. The price cut is opportunistic and larger than the decline in peers’ shares since the offer was disclosed on 9 February. </li>
<li>AustralianSuper, which holds a blocking stake and has a longer-term view, is unlikely to accept. Therefore, the likely outcome is for the Board to reject the offer. </li>
</ul>



Challenger Ltd (CGF AU) has reduced its non-binding offer for Pepper Money (PPM AU) by 13.5%, from A$2.60 to A$2.25 per share, citing deteriorating market conditions and the operating environment. 
The offer has been declared best and final. The price cut is opportunistic and larger than the decline in peers’ shares since the offer was disclosed on 9 February. 
AustralianSuper, which holds a blocking stake and has a longer-term view, is unlikely to accept. Therefore, the likely outcome is for the Board to reject the offer. 


Pepper Money (PPM AU): Challenger Reduced Offer Should Be Rejected

<ul>
<li>In response to an AFR article, <a href="https://www.smartkarma.com/entities/pepper-money-ltd-australia" target="_blank" data-smartkarma-citation="entities:24157:1" rel="noopener">Pepper Money (PPM AU)</a> disclosed a non-binding scheme proposal from <a href="https://www.smartkarma.com/entities/challenger-ltd" target="_blank" data-smartkarma-citation="entities:16870:1" rel="noopener">Challenger Ltd (CGF AU)</a> under which Challenger and KKR will jointly acquire Pepper. </li>
<li>The offer is at A$2.60, a 47.7% premium to the undisturbed price of A$1.76 and a 15.0% premium to the last close. The Board has granted due diligence access. </li>
<li>The NBIO is attractive compared to peer multiples and historical trading ranges. The presence of KKR (the largest shareholder) in the consortium suggests a high probability of a binding proposal.</li>
</ul>


In response to an AFR article, Pepper Money (PPM AU) disclosed a non-binding scheme proposal from Challenger Ltd (CGF AU) under which Challenger and KKR will jointly acquire Pepper. 
The offer is at A$2.60, a 47.7% premium to the undisturbed price of A$1.76 and a 15.0% premium to the last close. The Board has granted due diligence access. 
The NBIO is attractive compared to peer multiples and historical trading ranges. The presence of KKR (the largest shareholder) in the consortium suggests a high probability of a binding proposal.


Pepper Money (PPM AU): Challenger and KKR’s Attractive NBIO

<ul>
<li>This morning (9th Feb), leading non-bank lender <a href="https://www.smartkarma.com/entities/pepper-money-ltd-australia" target="_blank" data-smartkarma-citation="entities:24157:1" rel="noopener">Pepper Money (PPM AU)</a>  <a href="https://announcements.asx.com.au/asxpdf/20260209/pdf/06w2xl642f3455.pdf" target="_blank" rel="noopener">confirmed</a> KKR and <a href="https://www.smartkarma.com/entities/challenger-ltd" target="_blank" data-smartkarma-citation="entities:16870:1" rel="noopener">Challenger Ltd (CGF AU)</a> have submitted an NBIO by way of a Scheme.</li>
<li>KKR/CGF are offering A$2.60/share, a 47.7% premium to undisturbed. And ~1.49x P/B (based on 1H25 numbers). KKR currently holds <a href="https://announcements.asx.com.au/asxpdf/20250411/pdf/06hncksdd9ldxh.pdf" target="_blank" rel="noopener">60.34%</a>.  </li>
<li>CGF announced it would hold no more than 25% in Pepper Money, if delisted. CGF is down 3.6%. </li>
</ul>


This morning (9th Feb), leading non-bank lender Pepper Money (PPM AU)  confirmed KKR and Challenger Ltd (CGF AU) have submitted an NBIO by way of a Scheme.
KKR/CGF are offering A$2.60/share, a 47.7% premium to undisturbed. And ~1.49x P/B (based on 1H25 numbers). KKR currently holds 60.34%.  
CGF announced it would hold no more than 25% in Pepper Money, if delisted. CGF is down 3.6%. 


Pepper Money (PPM AU): KKR/Challenger's NBIO

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Each week, I’ll share five intriguing investment ideas that recently caught my attention. These ideas are meant to spark your research and help you kickstart the week ahead with fresh insights.Because these ideas are the result of my first-level idea generation process, they require more in depth research. Therefore, the ideas will often be concise, with occasional references to valuable work from other practitioners that I encourage you to explore.If you have something fascinating to share that could benefit me and the wider community, don’t hesitate to send it my way—I’d love to hear from you!

Australia

Pepper Money Limited of Australia operates in targeted market segments and asset classes. The Company specializes in mortgages, asset finance, loan and broker servicing. Pepper Money serves customers in Australia and New Zealand.

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Pepper Money (PPM AU)